The present invention relates to price management systems. More particularly, the present invention relates to systems and methods for index-based pricing in an integrated price management system.
Indexes, which are generally known in the art, have been employed in a variety of manners. Stock markets, for example, often use indexes as a gauge of general market condition. Other indexes measure the movement in national and international prices for commodities and other items of trade. For instance, in the chemical industry, well known periodic indexes are used to establish the index price of various bulk chemicals. Said indexes may be published on a daily, weekly, monthly, quarterly or annual basis.
Given the potential volatility in the future price of a particular commodity, it is often to the advantage of both buyer and seller to tie the price of a particular product to an agreed upon index or indexes. The customer's choice of indexes will vary depending upon industry segment for which they buy, the region where they are located, as well as the major commodity categories they buy in volume quantities. Customers must focus upon commodity-specific questions pertaining to product delivery speeds (leadtimes) and price trend expectations.
Index prices do not necessarily represent levels at which transactions have actually occurred. They are designed to show monthly spot market purchase order averages and are intended primarily to indicate month-to-month trends. Specific prices any buyer pays will vary widely depending on volume, market factors, distribution issues, specification variances, surcharges, packaging fees and other factors
Businesses employ a myriad of enterprise resource planning tools in order to manage and control business processes. For example, systems like SAP are employed to facilitate management by using objective data in order gain enterprise efficiencies. By manipulating objective data, these systems offer consistent metrics upon which business may make informed decisions and policies regarding the viability and direction of their products and services. However, in many cases, the decisions and policies may be difficult to procure as a result of the volume and organization of relevant data and may be difficult to administer as both temporal restraints and approval processes may inhibit rapid deployment of valuable information.
In particular, in the context of incorporating an index-based pricing and re-pricing policy into an integrated price management system within the context of said enterprise resource planning system, information regarding pricing terms tied to indexes throughout the system may be difficult to obtain. The pricing system, however, must be equipped to perform accurate re-pricing functions in response to changing indexes in deals having index-based pricing terms.
It is often the case that a sales force may need to modify the impact of a published index upon the agreed upon pricing structure. Various factors and operators may advantageously be incorporated into a formula which uses the index to calculate an index-based price in accordance with business realities. The process can be complicated and cumbersome and, as such not conducive to efficient deal negotiation.
As such, methods for generating index-based pricing formulas in a timely manner, as well as systems and methods for incorporating index-based pricing terms into deals in a manner guaranteeing their effectiveness may be desirable to achieve system-wide price management efficiency.
In view of the foregoing, Systems and Methods for Index-Based Pricing in a Price Management System are disclosed.